800.5018/9–2247
Memorandum by the Chief of the Division of Brazilian Affairs (Dawson) to the Assistant Secretary of State for Political Affairs (Armour)
Subject: Brazilian Desire for Wheat.
General
The Brazilian Embassy today delivered a note to the IEFC applying for readmission to that organization and asking for a quota of 40,000 tons of wheat monthly until the end of the year from non-Argentine sources, i.e., from the United States to all intents.
President Dutra discussed the general problem of Brazil’s wheat shortage with President Truman in Rio de Janeiro.63 Ambassador Pawley reports that our President promised to take action and designated Admiral Leahy64 to follow up the matter in Washington. It might be well to check with Admiral Leahy as to what he has done.
Brazil was granted no grain quota in the USDA’s export allocations for October and 15,000 tons for November. 25,000 tons remain for possible December distribution from IEFC recommendations for the second half of 1947 but there is no assurance this figure will be followed.
Army Wheat
The Brazilian Government has also been most concerned with getting export licenses for 25,000 tons of wheat bought by the Brazilian Army (and already paid for; irrevocable letter of credit) from sources which have not been engaged in the export trade and for which no quotas are available. This wheat is largely in New Orleans piling up storage charges.
The Brazilian Army wheat case has important political connotations since the man who handled the deal at this end was Vieira Machado of the Bank of Brazil who has just become Acting Brazilian Minister of Finance in replacement of the titular Minister who is taking leave of absence (the Minister’s illness is believed to be diplomatic). Also the leading generals in the Brazilian Army were responsible for the transaction and the Army is a potent internal political [Page 476] force. For all or part of the $3,500,000 spent for the Army wheat to be dissipated would cause a serious loss of face for Vieira Machado and the generals.
Suggested Solution
My suggestion would be to endeavor to have Brazil granted a monthly quota of 25,000 tons for each of the last three months of 1947, counting the Army purchases as the October quota and procuring export licenses for these. This would entail raising the November quota from 15,000 to 25,000 tons and fixing the December quota at 25,000 tons also.
This suggestion would not meet the Brazilian Government’s desires since it hopes for a total of 120,000 tons for the quarter. However, an allotment for October would normally be impossible at this late date. The suggestion would give Brazil 75,000 tons over three months instead of 80,000 over two months.
In order to accomplish what is suggested, it would be necessary to enlist the assistance of Messrs. Anderson and Harriman or their Under Secretaries as well as the IEFC. The latter has indicated a sympathetic attitude. Ambassador Martins informed me that he would personally take the matter up with Mr. Anderson and Under Secretary of Commerce Foster.
Future
The best estimates we have as to Brazil’s wheat and flour position is that 95,000 tons are on hand or in transit. Taking Brazil’s minimum requirements as 65,000 tons a month (it has ordinarily consumed about 100,000 in recent years), the quotas from United States sources suggested above should enable it to get through the year with slight imports from Argentina. The situation could be reviewed again in October or November when it becomes more evident whether Brazil can get much wheat from Argentina.
- President Truman attended and addressed the closing session of the Inter-American Conference for the Maintenance of Continental Peace and Security on September 2. For summary of President Truman’s address, see p. 78.↩
- Adm. William D. Leahy, Chief of Staff to the Commander in Chief of the U.S. Army and Navy.↩